Half-year profits at the stockmarket-listed owner of Rosenblatt and Memery Crystal have fallen sharply, but RBG Holdings says ‘cleaning up historic baggage’ to refocus on the core legal services business will drive growth.

Adjusted profits before interest, tax, depreciation and amortisation dipped to £2.9m in the six months ended 30 June, down from £7m on the same period last year. Revenue fell 23% to £20.5m.

RBG has endured significant boardroom turbulence in recent months. Former chief executive Nicola Foulston had her contract terminated earlier this year ‘as a result of cultural concerns and the execution of the group’s strategy’. She has since taken High Court action against the firm.

In July, RBG announced the £3m sale of its unwanted litigation finance business, LionFish, and announced the return to the board of its largest shareholder, Ian Rosenblatt, as executive vice-chair. It has also moved to cut debts and suspended the dividend. 

Ian Rosenblatt Exec Vice Chair RBG Holdings plc

Ian Rosenblatt

Moves to reduce the group’s risk profile included ceasing to carry any investment in conditional fee arrangements and damages-based agreements as assets on its balance sheet. Any fees from wins on such cases will be recorded as revenue when paid.

RBG has written down the retained value of all remaining CFAs, DBAs and the retained LionFish cases on the balance sheet to zero, leading to a non-cash write off of £12.8m.

In its interim results statement, RBG described trading within the Legal Services division as ‘robust’ in the first half, while the group has ‘good visibility on revenue and profitability’ in this division for the second half. ‘As a result, the board is confident that the core Legal Services business will meet full year market expectations,’ it added. 

Average revenue per fee earner is claimed to be among the highest in the industry. The firm has hired seven more partners since April.

CEO Jon Divers said: ‘Overall, I am pleased with the performance of our core Legal Services businesses, Rosenblatt and Memery Crystal, which are delivering solid revenues and profits. Their trading, despite the wider economic environment, has highlighted the resilience and counter cyclical nature of the businesses, both of which have over 30 years’ proven trading history. Driving the organic growth of these businesses is at the heart of our plans.’

RBG shares fell 9% in early trading to 21p.

 

This article is now closed for comment.